The Sports Economist

CLEVELAND--The Greater Cleveland Sports Commission has been named "2007 Sports Commission of the Year" by the National Association of Sports Commissions.

The award was chosen by a national panel of Sports Commission executives and was presented at the 2008 NASC Sports Event Symposium held in Omaha.

Labels: labor markets, MLB, NASCAR, NBA

Whether to support the Games themselves or merely the city's official bid, the latter carrying a price tag of $50 million to $100 million, one hears that "only private money" is underwriting those activities; no tax dollars will be spent. "Private" implicitly refers to donations from corporations and wealthy citizens. However, in jargon that students learn on the first day of Economics 101, virtually all expenditures or allocations have an opportunity cost, whether it be for a firm or family.

If Boeing, Sears, Motorola or McDonald's gives $1 million to help finance our Olympic bid, that is $1 million that does not get returned to stockholders as dividends or plowed back into the company for new projects and production. In addition, that is $1 million that does not, then, support an exhibition at the Field Museum, a new gallery at the Art Institute, or an after-school youth program.

When I sit down each December to write out checks to local, national and international charities and other non-profit organizations, I am implicitly choosing how to allocate, say, $2,000 among various groups and activities. The slice that goes to WTTW Ch. 11 doesn't go to the Chicago Coalition for the Homeless or the American Cancer Society—or to the University of Chicago. It's still just $1 million or $2,000 no matter how a corporation, a wealthy benefactor or I cut it.

There is no free lunch in this world and no free Olympic Games either.

Labels: Allan Sanderson, Olympics, opportunity cost

Blame all this on Max Starks.

Starks started on the offensive line in the Super Bowl for the Pittsburgh Steelers three Januarys ago. But he couldn't hold onto his starting position, losing the right tackle spot to Willie Colon last training camp.

Starks wound up starting only four games for the Steelers in 2007. He became a disposable player, right?

Starks became a free agent this off-season, but the Steelers slapped a transition tag on him to prevent him from leaving. They were willing to guarantee him $6.8 million in 2008 to have him ride their bench again.

That displayed the value of offensive linemen in today's NFL – and the 2008 draft drove that point home.

Michigan's Jake Long became the first offensive tackle selected No. 1 overall in a draft since 1997 when the Miami Dolphins gave him that honor Saturday.

Seven more offensive tackles were selected in the next 25 picks – and Atlanta, Carolina and Kansas City traded up to get theirs. That's eight offensive tackles in the first round.

When the Prime Minister addressed a schools sports conference in Telford in February, the 2012 Olympics awarded to London were supposed to be the nation's feel-good centrepiece for nine major international sporting tournaments, starting with the the 2009 World Twenty20 and the 2010 Ryder Cup in south Wales.

Mr Brown had good reason to be cheerful. The next Ryder Cup was in the bag, obviously, as were the London Olympics, the 2014 Commonwealth Games in Glasgow, the 2014 Ryder Cup at Gleneagles, and the 2019 Cricket World Cup. But now, thanks to a fastidious and, no doubt, smug desk Johnny at the Inland Revenue responsible for pointing out the devil in the detail of the Income and Corporation Taxes Act of 1988, four of the events yet to be allocated - the 2013 rugby league World Cup, the 2015 rugby union World Cup, Euro 2016, and the 2018 football World Cup - are all in jeopardy.

And here is why. When Thierry Henry steps on to the Old Trafford turf on Tuesday night for the second leg of Barcelona's Champions League semi-final against Manchester United, it will cost the Barça star more than he bargained for. The Revenue's little squeeze, unearthed by said clever-clogs tax mandarin, means Henry, like all visiting international athletes and entertainers who are handsomely rewarded by major sponsors, will have to declare his endorsements and pay a slice of the income from his high-profile global sponsor, Gillette, to the Revenue. No other country in the world applies such a charge - and that seemingly inconsequential quirk is discouraging international sports governing bodies such as Uefa, Fifa, the International Cricket Council and the International Rugby Board from favourably considering staging their events in this country.

If their admittedly pampered practitioners baulk at coming to the UK because of the tax, their event is diminished. The easy alternative, of course, is to take it somewhere else. And, as we have seen with the Champions League, that is already happening.

When the Treasury were made aware of this issue, through a legal challenge in May 2006 by Andre Agassi, they predictably dug their heels in - despite the American tennis player's reasonable assertion that he did not live in this country and that the payments went not directly to him but to a service company, which is common practice.

Agassi brought the action after receiving a demand for £27,500 on his endorsement earnings in the UK during the 1998-99 tax year. The Law Lords ruled that Nike and Head, his sponsors, benefited from his presence at Wimbledon - and so did he. Which is hard to argue with - if you don't take account of the knock-on effect the ruling has. And that is not the brief of civil servants. These are bottom-line merchants and, in the case of the Revenue, that is only about money.

It was a crucial victory for the keepers of the national purse. Had they lost they faced paying out millions to superstar athletes and entertainers stretching back over 18 years. Indeed, when HM Revenue and Customs won the case, they decided to turn the screw even further.

Initially, they calculated the tax as a percentage of 365 working days in a year. They then concluded that, as nobody works every day of the year, they would reduce that total significantly to take into account holidays and time off for injury - so their cut went up accordingly. What started as an isolated case has mushroomed into a serious problem for sport and the government.

'Two major international sports stars, a golfer and a tennis player, are considering not coming here for some tournaments this summer,' a well placed source tells me. 'They will compete at Wimbledon and The Open, obviously, but bypass smaller events. This has already happened and one big golf event last year attracted a poor field because of this tax.'

Henry shares the Gillette spotlight with two obvious suspects in this regard: Tiger Woods and Roger Federer. There is little chance of Woods not playing in The Open, or Federer boycotting Wimbledon. But, for various reasons, they will not be lighting up our summer anywhere else.

Already, Federer opts out of Queen's in favour of the grass of the Halle tournament in Germany. And Woods plays only in those tournaments where his presence is adequately compensated - adequate being $3million. The richest sportsman in the world earns about £1m a week, whether he is swinging a club or not, so he is unlikely to look favourably on handing over any of that to the British taxman.

Jake Long, the University of Michigan offensive lineman, with their first pick — all 2.01 metres (six foot seven) and 143 kilograms (315 pounds) of him. Then they announced they'd pay him $A61.2 million over five years. The salary's a record — it makes him the highest-paid offensive lineman in the comp

Billionaire Sir Allen Stanford believes Twenty20 cricket can replace football as the biggest game in world sport.

The Texan told BBC Sport he was ready to invest in an English version of the Indian Premier League and predicted it could be worth as much as £500m.

"Twenty20 has the potential to be the most popular team sport in the whole world in maybe less than 10 years.

"But it's going to take a highly organised, highly efficient management team to run this show," he said.

MONTREAL - Montreal police said Tuesday that they expected to make more arrests following Monday night's riot after a Canadiens hockey win led to a riot downtown.

Sixteen people have already been arrested.

There were no major injuries, but one policewoman was slightly hurt during the incidents which occurred as fans leaving the Bell Centre took over the streets.

All those arrested were men, three were minors. Some 10 businesses were damaged as well as 16 cars. Some police vehicles were set ablaze during the incident and police estimate damages to their cars at about $500,000.

The 16 people arrested face a number of charges - including breaking and entering a business, armed assault on a police officer, mischief on a police vehicle, assault and various bylaw infractions.

Two 17-year-old males and another 14-year-old boy are among those arrested by police.

Police say they will be out in force after the next game, Thursday, and that they may shutdown some downtown streets.

Closing off public access to Ste. Catherine St. after playoff hockey games is a possibility to avoid violence in the future, said Montreal police Chief Yvan Delorme.

While refusing to talk specifically about strategy, Delorme hinted that shutting the street down was an option even before last night's melee.

"We have to work with the different merchants on Ste. Catherine St. We have to work together on that but it is a possibility in the future," Delorme said.

The incident broke out hours after the Montreal Canadiens eliminated the Boston Bruins from the NHL playoffs.

Business owners usually revel in vanquishing their competition. But when Steve Roberts wears his hat as a downtown St. Louis developer, he roots for competitors.

Indeed, Roberts, a principal in St. Louis-based Roberts Brothers Properties, is concerned about the broader impact of projects stalling or dying.

If the adage that success breeds success, then the reverse could be true: Failure is contagious.

"When you have projects or developers failing it raises suspicions in the minds of potential investors, retailers and even residents," Roberts said. "I don't think one particular project can take down the whole downtown renovation effort, but if you have multiple ones for different reasons, it hurts those of us who have been sowing our fields for many years."

Labels: economic development, St. Louis ballpark village, stadiums

He's an outsider and can't possibly know how much our pride and ego is worth.

Worse, he's an American. He can't know anything about hockey. Background knowledge in this case can't possibly count for anything.

Labels: economic impact, media

The proposed 600-acre site, near the southern intersection of the 57 and 60 freeways about 20 miles east of Los Angeles, would be surrounded by a shopping mall, and located on a vacant property which Roski already owns. Roski said around 12 million people live within 25 miles of the site.

“We are aware of it and are monitoring all stadium-related developments in southern California,” NFL spokesman Brian McCarthy said from his New York office.

Roski said the cost would be around $800 million, adding the stadium will be built into a hillside meaning far less steel will be required. And that, he said will result in a cost of about $400 million less than it might be otherwise.

Labels: NFL, The Stadium Game

'AFL footy clubs sell hope' so 'if a club has a glaring deficiency they can address through free agency, doesn't that help them sell hope? Doesn't it make them more competitive and help competitive balance?'

The Minnesota Ballpark Authority is expected to announce today a $1 million fund to enhance the area around the Twins new ballpark.

Labels: economic impact, new stadium

Labels: NBA, NCAA; basketball; strategy

Three members of Congress want the Justice Department to investigate whether the Bowl Championship Series is an illegal enterprise.

Representatives Neil Abercrombie, Democrat of Hawaii; Lynn Westmoreland, Republican of Georgia; and Mike Simpson, Republican of Idaho, introduced a resolution saying the B.C.S. restricts trade because only the largest universities compete in its games. The resolution would require the Justice Department’s antitrust division to investigate if the B.C.S. violates federal law.

The measure, if it passes, would put Congress on record as supporting a postseason playoff.

The three lawmakers represent home-state universities with recent complaints against the B.C.S.

“Who elected these N.C.A.A. people?” Abercrombie said at a news conference Thursday on Capitol Hill while gripping a souvenir University of Hawaii football. “Who are they to decide who competes for the championship?"

The Florida House has passed a $65.1 billion budget for fiscal 2009 that withholds state sales tax revenue previously pledged toward professional sports team venues, which could adversely impact outstanding debt and credit ratings.

At a time when revenues supporting Florida's budget are declining rapidly, especially sales and real estate taxes, lawmakers said they could not justify funding venues for billionaire owners of sports franchises while at the same time approving budget cuts affecting the state's "most vulnerable citizens."

The budget was approved 72 to 41 last Thursday, but the amendment placing a year-long freeze on the sales tax subsidy was passed unanimously by a voice vote.

Rep. Ron Saunders, D-Monroe County, said many lawmakers who supported the subsidy in the past did so believing it contributed to economic development. Saunders said his amendment would prohibit the Department of Revenue from distributing sales tax revenues to sports franchises in fiscal 2009, but the Legislature could resume the payments in fiscal 2010.

"The notion of funding sports franchises when we're really going to be taking over $1 billion from our most vulnerable citizens in our state would shock people," Rep. Dan Gelber, D-Miami Beach, said in support of Saunders' amendment. "[This] will show the citizens of our state that our priorities are with them and not with billionaires and not with sports franchises but with the people, the students, the teachers, the medically needy, and the children of our state."

A number of cities, counties, and conduit issuers have sold debt backed by the state sales tax for new or renovated football, baseball, basketball, and hockey venues across Florida. The exact amount of debt sold was not immediately available but the subsidy has been available for nearly 20 years.

In 1991, lawmakers enacted a statute with a funding mechanism for state support of the construction of professional sports facilities in Florida. The law allows specified teams to qualify to receive $2 million of state sales taxes annually over 30 years. The law allows the pledged revenue to be used to back bonds.

"Clearly this money has been pledged for debt service and it was statutorily allowed to be pledged for debt service," said Randy Hanna, managing shareholder at Bryant Miller Olive LLP. "For [the state] to remove that money would violate the contract that the state has with the bondholders."

Bryant Miller Olive was bond counsel on the sales tax securitization of bonds for the construction of Raymond James Stadium for the National Football League's Tampa Bay Buccaneers. Other teams that received the subsidy include the NFL's Jacksonville Jaguars, the National Hockey League's Tampa Bay Lightning and Florida Panthers, Major League Baseball's Florida Marlins and Tampa Bay Rays, and the National Basketball Association's Miami Heat and Orlando Magic.

Swimming has its version of the aluminum bat, an improvement in capital design that makes "labor" very productive, at least in an absolute sense. Maybe too much so:

Since its debut at the Missouri Grand Prix in February, the new Speedo LZR swimsuit has made nearly as many waves out of the pool as it has in it. With 18 of 19 record-setting, long-course swims – the same pool format of the Olympics – and 17 of 18 record-setting short course swims for the LZR dating back to its inception, Speedo has had to withstand charges of “technological doping” from those in the swimming community and beyond.

FINA, the international governing body for swimming, met with the world’s top swimsuit manufacturers in an emergency meeting Saturday to determine whether the suit and others like it were giving certain athletes an unfair competitive advantage. Though FINA endorsed the suit for a second time and decided to allow other suit makers to copy the design, some in the swimming community have begun to take the matter into their own hands.

The NCAA men’s National Championships, the Italian Olympic Trials and the Canadian Olympic Trials are among meets that have banned the LZR – as well as TYR’s new swimsuit, dubbed the Tracer – from competition.

Given the discussion on this post and this post recently, I looked to see if there was anything regarding the official Olympic (i.e. event organizer position) on this swimsuit. Perhaps readers have seen something, but I couldn't find anything in a quick GIS. But it wouldn't surprise me if Olympic officials would like to see its use.

Labels: doping, Olympics, swimming

When one of the most successful coaches in the history of track and field goes on trial next month in the long-running federal investigation into doping in sports, lawyers for both sides are prepared to reveal that cheating in track is far more widespread than previously known.

Labels: doping, technology, tournament theory

In this paper the betting on baseball games from April 8, 1987 to May 12, 1987 attributed to Pete Rose in the Dowd Report to the Commissioner of Baseball is analyzed. The results show Rose lost $4,200 betting on the Cincinnati Reds, the team which he managed; $36,000 betting on other teams in the National League, and $7,000 on his American League wagers. These losses, which include about $20,000 to $25,000 in transaction fees are small relative to the $450,000 in winning and losing bets (including the transaction fees) and are consistent with an informational efficient market. Assuming these bets are Rose's, his expertise (24 years as a player, 4 years as a manager, major league leader in games played) was not an advantage when betting on his own team, on other teams in his league that he studied and competed against, or on teams in the other major league.

Labels: gambling, MLB

Regarding Skip's post on Chester, Pa.'s forthcoming soccer stadium.

Statistics show why the Philadelphia Inquirer called Chester ``five square miles of misery.'' Unemployment of 9 percent is almost double the state average; the violent crime rate was second-highest among Pennsylvania cities in 2006; and its schools ranked lowest in the state in 2001, government figures show.

The stadium is positioned as a springboard for the latest effort at economic revival, with $500 million to be invested in adjacent condominiums, stores and restaurants. All told, the project will generate about 1,000 permanent jobs and $19 million in annual tax revenue, said Nick Sakiewicz, chief executive officer of the team ownership group.

According to this 2006 data (I downloaded the national data (i.e. "download Excel of entire table")), of 8,251 US cities listed, only 28 of them had violent crimes per 1,000 citizens of 25 or above. Chester, 26.5, was one of them. That's in the whole US! And in terms of murders per 1,000 residents, there were only 66 in the US that had murder rates of 0.49 or above. Chester, 0.49, was one of them.

I posted the following in the comments to Skip's post.

With a violent crime rate so high, that's going to affect people's decision a. to come to the stadium and b. to hang around afterwards.

If you build it, they won't necessarily come. But if you build in in a crime-infested area, they'll be even less-likely to come.

To end doping in sports, the doping game must be restructured so that competing clean is in a Nash equilibrium. That is, the governing bodies of each sport must change the payoff values of the expected outcomes identified in the game matrix. First, when other players are playing by the rules, the payoff for doing likewise must be greater than the payoff for cheating. Second, and perhaps more important, even when other players are cheating, the payoff for playing fair must be greater than the payoff for cheating. Players must not feel like suckers for following the rules.

(Submitted by Ryan Buck)

I'd like to nominate the St. Louis Cardinals, the City of St. Louis, the Cordish Company, and the Centene Corporation for a Luis. The New Busch Stadium is entering its third season and still no progress has been made on the much-promised Ballpark Village. In fact, the proposed plan completely fell apart today. So instead of a multi-million dollar urban redevelopment it looks like St. Louis will have to put up with a vacant lot (filled with weeds and a murky rainwater pond, fittingly referred to as Lake DeWitt) for a little while longer. If you're not familiar with our eyesore over the leftfield wall you will certainly have the chance to get acquainted during next year's All-Star Game.

Wow … a ball team reneging on agreements made in securing a new ballpark? Who knew? Ryan is bang on, though—MLB is like the Casanova trying to get into a girl’s knickers. He’ll promise anything but once the deed is done don’t expect your calls to be returned—and never expect child support.

Spring training may have a $30 million economic impact in the Tucson area. But taxes from those visitors aren't enough to pay for stadium improvements, a group of business leaders told the Pima County Board of Supervisors Tuesday.

So to keep spring training from leaving, the community needs to pay an extra half-cent sales tax on restaurants and "amusements," like movies, theater and concert tickets, bowling, billiards, carnivals, fairs and other sporting events, and not just rely on tourist items like hotels and rental cars. The group, calling itself Bases Loaded Tucson, has prepared draft legislation calling for creation of a regional authority empowered to impose those taxes.